"Southwest plans for assigned seats"

Wednesday, May 17, 2006

Southwest plans for assigned seats
By Mary Schlangenstein
Bloomberg News


Southwest Airlines Co., the most profitable U.S. carrier, is making changes
to its reservation system that would allow it to begin assigning seats for
the first time. 

Southwest is "not on any timeline" to decide whether to end first-come,
first-served boarding, Chief Executive Officer Gary Kelly said. The carrier,
the only major U.S. airline that doesn't match passengers to seats, will
finish the computer changes this year. 

"We've got to get comfortable that we're going to generate more revenue by
assigning seats," Kelly said on Monday in an interview. "If we get
comfortable that we can improve customer service, based on what our
customers think, and we can become more efficient, it's a home run." 

Assigned seating would be the latest move away from the basic model that has
helped Dallas-based Southwest remain profitable every quarter since April
1991. Southwest began its first marketing alliance with another carrier last
year, is considering international flights and now uses higher-cost airports
such as Denver. 

The lack of assigned seating is passengers' chief complaint about Southwest,
said David Stempler, president of Potomac, Maryland-based Air Travelers
Association, a consumer group. 

"It's something that just sticks in the craw of a lot of passengers,"
Stempler said. "Most people just don't like it, especially with the other
low-cost carriers providing assigned seating." 

Southwest won't change its boarding process this year or in 2007, Kelly
said. A decision about doing so may come this year, he added. Kelly
estimated the computer-system changes would cost less than $5 million. 

Southwest, the largest low-fare, low-cost carrier, wants the technology in
place so that it can implement any change quickly, Kelly said. When the
airline decided to start the alliance, with ATA Holdings Corp., it had to
delay the so-called code share while it changed its computer systems, he
said. 

"For the effort it takes for us to have that tool in our war chest, it's
just not worth the risk of not having it," Kelly said of being able to
assign seats. "We've been very unique, and that has been a great advantage.
But sometimes it actually works against us." 

Southwest passengers now are assigned to one of three boarding groups when
they check in, and are allowed to select any seat once they're on the plane.
Southwest says the system permits quicker boarding, cutting gate time for
its jets. 

Some travelers won't fly the airline because it doesn't assign seats,
although about 75 percent prefer the open seating, Kelly said. 

"I understand Southwest's concern in terms of losing their quick
turnarounds," Stempler said. "If they could figure out a way to do it
quickly, it would certainly be advantageous." 

Southwest holds down training and spare-parts costs by using only one
airplane type, Boeing Co. 737s, and keeps productivity high by reducing
aircraft waiting time at airports. Lower costs allow it to profitably
undercut major rivals' fares. 

The airline said in October 2004 that ticketing-data technology it was
developing might increase efficiency enough to allow seat assignments.
Southwest has continued studying the issue, Kelly said. 

Southwest in recent years also stopped issuing reusable plastic boarding
passes in favor of disposable paper ones, began serving snack boxes on
longer flights instead of only peanuts, and allowed online check-in and
boarding passes instead of requiring them to be issued at airports. 

The airline's shares fell 9 cents to $16.17 at 4:02 p.m. in New York Stock
Exchange composite trading. The stock has fallen 1.6 percent this year.

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